Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Fasten Your Seatbelts Stock Market Make Or Break – Big Trends Ahead - 17th Sep 20
Peak Financialism And Post-Capitalist Economics - 17th Sep 20
Challenges of Working from Home - 17th Sep 20
Sheffield Heading for Coronavirus Lockdown as Covid Deaths Pass 432 - 17th Sep 20
What Does this Valuable Gold Miners Indicator Say Now? - 16th Sep 20
President Trump and Crimes Against Humanity - 16th Sep 20
Slow Economic Recovery from CoronaVirus Unlikely to Impede Strong Demand for Metals - 16th Sep 20
Why the Knives Are Out for Trump’s Fed Critic Judy Shelton - 16th Sep 20
Operation Moonshot: Get Ready for Millions of New COVAIDS Positives in the UK! - 16th Sep 20
Stock Market Approaching Correction Objective - 15th Sep 20
Look at This Big Reminder of Dot.com Stock Market Mania - 15th Sep 20
Three Key Principles for Successful Disruption Investors - 15th Sep 20
Billionaire Hedge Fund Manager Warns of 10% Inflation - 15th Sep 20
Gold Price Reaches $2,000 Amid Dollar Depreciation - 15th Sep 20
GLD, IAU Big Gold ETF Buying MIA - 14th Sep 20
Why Bill Gates Is Betting Millions on Synthetic Biology - 14th Sep 20
Stock Market SPY Expectations For The Rest Of September - 14th Sep 20
Gold Price Gann Angle Update - 14th Sep 20
Stock Market Recovery from the Sharp Correction Goes On - 14th Sep 20
Is this the End of Capitalism? - 13th Sep 20
The Silver Big Prize - 13th Sep 20
U.S. Shares Plunged. Is Gold Next? - 13th Sep 20
Why Are 7,500 Oil Barrels Floating on this London Lake? - 13th Sep 20
Sheffield 432 Covid-19 Deaths, Last City Centre Shop Before Next Lockdown - 13th Sep 20
Biden or Trump Will Keep The Money Spigots Open - 13th Sep 20
Gold And Silver Up, Down, Sideways, Up - 13th Sep 20
Does the Stock Market Really "See" the Future? - 12th Sept 20
Basel III and Gold, Silver and Platinum - 12th Sept 20
Tech Stocks FANG Index Nearing Critical Support – Could Breakout At Any Moment - 12th Sept 20
The Tech Stocks Quantum AI EXPLOSION is Coming! - 12th Sept 20
AMD Zen 3 Ryzen 4000 Questions Answered on Cores, Prices, Benchmarks and Threadripper Launch - 12th Sept 20
The Inflation Mega-trend is Going Hyper! - 11th Sep 20
Gold / Silver Ratio: Slowly I Toined… - 11th Sep 20
Stock Market Correction or Reversal? The Jury Isn't Out! - 11th Sep 20
Crude Oil – The Bearish Outlook Remains - 11th Sep 20
Crude Oil Breaks Lower – Sparking Fears Of Another Sub $30 Price Collapse - 11th Sep 20
Inflation by Fiat - 10th Sep 20
Unemployment Rate Drops. Will It Drag Gold Down? - 10th Sep 20
How Does The Global Economy Recover After This Global Pandemic? - 10th Sep 20
The Best Mobile Casino - 10th Sep 20
QE4EVER! - 9th Sep 20
AMD Ryzen Zen 3 4800x 10 Core 5ghz CPU, Cinebench Benchmark Scores (Est.) - 9th Sep 20
Stock Traders’ Dreams Come True – Big Technical Price Swings Pending on SP500 - 9th Sep 20
Should You Be Concerned About The Stock Market Big Downside Rotation? - 9th Sep 20
Options Traders Keep "Opting" for Even Higher Stock Market Prices - 8th Sep 20
Gold Stocks in Correction Mode - 8th Sep 20
The law of long-term time preference and Gold ownership - 8th Sep 20
Gold Bull Markets: History and Prospects Ahead - 8th Sep 20
Sheffield City Centre Coronavirus Shopping Opera Ahead of Second Covid-19 Peak - 8th Sep 20
Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
From Trump’s TikTok Mess to US Tech Cold War against China - 7th Sep 20
The Federal Reserve vs. Judy Shelton And Gold - 7th Sep 20
Fed Dials Up Inflation Target…Own Gold - 7th Sep 20
Does Gold Still Have Plenty of Potential? - 7th Sep 20
CDC Shock Admission - THERE IS NO PANDEMIC! Over 90% of Deaths NOT From COVID19 - 7th Sep 20
Stock Market SPX to Gold/Silver Ratios Explored – What To Expect Next - 7th Sep 20
Is the Precious Metals Market really Overwhelmed and Chaotic - 7th Sep 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Great Investment Bargains in Japan - How to participate in the coming boom

Stock-Markets / Japanese Stock Market Mar 27, 2007 - 10:41 AM GMT

By: Money_and_Markets

Stock-Markets

While China is indeed growing like a weed, many of its Asian neighbors are growing almost as rapidly. What's more, the stocks in some of these other countries are trading at lower valuations.

Since I was born with the cheapskate gene, I just love bargains. So today I want to tell you about Japan, a great place to find some of Asia's greatest value stocks.

Let's start with three facts:

Fact #1: Japan boasts the second-largest economy and stock market in the world.


China may have the sexier growth story, but Japan is far bigger in terms of current stature. In fact, the total value of the Japanese stock market is five times the size of China's market.

Fact #2: Japan is poised to benefit from the growth of its Asian neighbors, including China.

Japan has long been a heavy exporter, and China is eager to tap into Japan's technical expertise in areas like auto manufacturing, industrial machinery, and construction. As a result, Japan is now China's largest trading partner. And it's one of the few countries in the world that has a trade surplus with China.

Fact #3: Japanese stock prices are still 60% below their 1989 peak.

It's hard to believe, but 17 years after the Japanese market hit all-time highs, the country's stocks are still trading at a fraction of those levels. In fact, with a price-to-cash-earnings ratio of 8.5 and a price-to-book ratio of 1.9, Japan is the least expensive major equity market in the world.

Bottom line: Japan is an important force in the world … its economy is benefiting from the strength of its Asian neighbors … and yet its stocks remain cheap by historical and relative measures.

On top of that …

The Japanese Economy Is Strengthening From Within

Japan has transformed itself into a leaner, more efficient, and more profitable economy. It took years of painful restructuring, long-overdue layoffs, the trimming of unprofitable business lines, and debt reduction but it's starting to pay off.

After a 17-year wait, the Japanese economy is ready to roar along with the rest of its neighboring Asian tigers. One sign: Strengthening real estate.

Japan has been one of the very few parts of the world where real estate prices haven't been on fire. Nationwide, commercial and residential prices are still half of what they were in 1991.

But, according to the country's Ministry of Land, Infrastructure and Transport:

  • In 2006, Japanese land prices rose for the first time in 16 years. The average price for commercial land in Japan's three largest cities rose 8.9%, while residential land prices grew 2.8%.
  • Tokyo office vacancies fell to 2.87% in January, the lowest monthly level in at least six years.
  • Real estate companies were gaining favor with investors, too. Last year, Mitsubishi Estate and Mitsui Fudosan rose 50% and 31%, respectively. And the Tokyo Stock Exchange REIT Index has gained about 40% in the last six months.

This renewed activity is spilling over into other areas, too. According to just-released statistics from the Bank of Japan, the value of financial assets held by Japanese households at the end of December hit a record 1.541 quadrillion yen (US$13.053 trillion).

It seems as though the Japanese are finally gaining confidence in their country's prospects. They're starting to pull their money out of the bank and from under their mattresses, and invest it in stocks and bonds — the balance of cash and bank deposits held by Japanese households declined by 0.5% from a year earlier.

You can't blame Japanese investors for being gun-shy … 17 years of waiting is long enough to strain anybody's patience. But if the country's conservative households are leaving the banks and shifting their money into other assets, it may be the time for foreigners to do the same.

How to Participate in the Resurgence of Japan

In my book, the best way to invest in Japan is by picking out the individual companies that are already seeing exploding revenues and profits. Then, I take a look at their share prices to make sure they still represent good values.

However, for a more diversified approach to Japan's stocks, Americans can choose from seven different exchange-traded funds.

Investors interested in the big-name, large-cap issues should check out the SPDR Russell/Nomura Prime Japan (JPP) , and the iShares S&P/TOPIX 150 (ITF) .The iShares MSCI Japan Index Fund (EWJ) also mainly holds large-cap stocks, though it has some smaller companies thrown in for good measure.

For a fund with a greater focus on small- and mid-cap companies, look to the SPDR Russell/Nomura Small Cap Japan (JSC) .

If you're specifically interested in stocks that pay dividends, there are three different ETFs being offered by WisdomTree that fit the bill — the Japan Total Dividend Index Fund (DXJ) , the Japan High-Yielding Equity Fund (DNL) , and the Japan SmallCap Dividend Index Fund (DFJ) .

Remember, there's a lot more to Asian investing than just China. So if you're looking for a low-valuation way to participate in the economic miracle unfolding overseas, keep Japan in mind. I think you'll really like what you see.

Best wishes,

Tony Sagami

P.S. If you're interested in hearing more about my favorite undervalued Asian stocks, subscribe to my Asia Stock Alert service.
This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.MoneyandMarkets.com


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules